Where any person receives, in any previous year, from any person or persons any immovable property for a consideration, the stamp duty value of such property exceeds such consideration, if the amount of such excess is more than the higher of the following amounts:
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to five per cent of the consideration
The excess differential amount will be taxable in the hands of the receiver.
Where any person receives, in any previous year, from any person or persons any property other than immovable property for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration.
However, money received without consideration by an individual or HUF from any other persons other than a relative is chargeable to tax if the aggregate value of the money received during a year exceeds Rs.50000/-.
On the other hand, if a taxpayer receives a gift of Rs.55000/- during his/her birthday from a friend, the entire amount of Rs.55000/- will become taxable under income tax, as it exceeds the threshold.
Gift from relatives is not taxable under the Income Tax Act. As per the Income Tax Act, the following lists of persons are defined as a relative of an individual. Hence, only money received from the following persons will be exempt from income tax for an individual taxpayer.
Money and gifts received by an individual taxpayer on the occasion of his/her marriage are exempt from income tax.
Money received by way of Will or by way of inheritance is exempt from income tax. Hence, no income tax will be payable on any movable or immovable assets inherited, consequent to the demise of a relative.
Similar to inheritance being not taxable, money received in contemplation of death of an individual or Karta or member of a Hindu undivided family is also exempt from Income Tax. According to the Dictionary, the word contemplation means “the state of being considered or planned”.
According to the Income Tax Act, any money received from a local authority or fund, foundation, university, other educational institution, hospital or other medical institution or any trust having 12A registration is exempt from income tax.
Under this section, money received by a meritorious student from a college or university or a patient under medical care can be exempt from income tax.
Any compensation or other payment, due to or received by any person, by whatever name called, in connection with the termination of his employment or the modification of the terms and conditions relating thereto will be exempt from income tax.